Hudson Pacific Nabs a Big One

Hudson Pacific Properties has landed a huge lease with the world’s leading Internet TV network.

By Scott Baltic, Contributing EditorHPP ICON Office Tower Rendering

With a reported 57 million subscribers and hot original content like “House of Cards,” “Orange Is the New Black,” “Unbreakable Kimmy Schmidt” and “Sense8,” how much more Hollywood can Netflix go? Substantially further, as it turns out.

On Thursday, the company, which bills itself as the world’s leading Internet TV network, and Hudson Pacific Properties announced that Netflix will lease 60 percent of HPP’s ICON office tower at Sunset Bronson Studios, on Hollywood’s famed Sunset Boulevard. Netflix’ growing Southern California staff will occupy 200,052 square feet at ICON, a 14-story, 323,000-square-foot office tower set for completion in late 2016.

An HPP spokesperson confirmed to Commercial Property Executive that the Netflix deal is the first prelease for ICON. The deal reportedly is also the largest office lease, by square footage, signed to date in Hollywood.

ICON is part of Sunset Bronson Studios, a nearly $200 million creative office development currently under construction next to the former Warner Brothers Studio, which first became operational in 1919.

Hudson Pacific’s other projects at the development include a roughly 1,600-space parking structure now underway and a planned five-story, 96,000-square-foot creative office building for delivery in mid-2017. Both office buildings will be Class A, LEED Gold–certified structures with large floor plates, significant column-free spans, and underfloor power and data options.

And Sunset Bronson is still an active studio lot, where networks like HBO, FreemantleMedia, KTLA and ABC all produce and film shows, according to Hudson Pacific. ICON will have 11 sound stages and more than 300,000 square feet of production facilities.

“ICON’s innovative architecture, sustainable design, and access to top-of-the-line sound stages and production facilities are perfect for next-generation tech and media companies like Netflix. We’re transforming Sunset Bronson Studios into the most dynamic creative and production complex in the entertainment business today,” Hudson Pacific chairman & CEO Victor Coleman said in a prepared statement.

But of course for every gain, there’s a loss. Last Friday’s TreppWire report from Trepp L.L.C., citing a story in Variety, noted that as of now, Netflix is the largest tenant (with 32 percent) at 335-345 N. Maple Drive, a 287,748-square-foot office owned by Tishman Speyer in Beverly Hills. That lease ends in 2018, and a Netflix spokesperson confirmed to CPE that the company will be vacating that site as part of the move to ICON.

The Maple Drive property is one of three backing the $220 million Maple Drive Portfolio loan, which in turn makes up 6.8 percent of JPMCC 2007-LD11. The loan is current and matures in June 2017, and its DSCR has been climbing since about 2013, to 1.59x in the first quarter of this year, according to Trepp.